Wealthy to pay for own healthcare costs

The middle class would be forced to cover their own health costs and Medicare would be left as a basic safety net under the commission of audit’s plan, cleaving universal healthcare in two.

In a comprehensive outline of the “user pays" principle applied to health, the audit recommended the introduction of patient payments for all ­Medicare services and emergency department visits, a hike in patient ­contributions for subsidised drugs, and an end to free medicines for concession card holders.

“We’re saying to high income earners who can afford to look after ­themselves, they should look after themselves," audit chairman
Tony Shepherd
said.

Private health insurers would be deregulated and their permitted coverage area expanded to primary care, with insurers allowed to charge smokers higher premiums, in a massive boon for the industry and the soon-to-be-floated Medibank Private.

The audit says a complete recast of the health system is necessary in order for it to be sustainable, and in the longer-term a universal health insurance arrangement similar to Obamacare in the United States should be considered.
Photo: Peter Braig

Medical profession and patient advocacy groups reacted angrily to the recommendations; the Australian Medical Association said it would be willing to march on Parliament if they were accepted wholesale.

Treasurer
Joe Hockey
would not comment on the government’s thoughts on the highly contentious proposals on Thursday, saying only “our support for private health insurance is well known".

But health minister
Peter Dutton
has long supported a greater role for private health insurers in the system, saying as late as Thursday morning the government was committed to rebuilding general practice with greater support from private insurers.

Under the audit’s recommendation, middle- to higher-income earners would be required to take out private health insurance in place of Medicare, or face a prohibitive increase in their Medicare levy.

Related Quotes

Company Profile

These expanded private health insurance plans would have to cover all healthcare costs including primary care and treatment in a public hospital. Singles earning over $88,000 and families earning over $176,000 would be subject to the requirement.

Audit’s recommendations

The audit recommends a $15 payment for general patients for all items currently listed on the Medicare Benefits Schedule, which would take in not just GP visits but also pathology, X-rays and most specialist services. Concession card holders would pay $5.

To ensure costs were not just shifted to public hospitals, states should be encouraged to make people pay for emergency department visits.

Once a safety-net of 15 visits over the course of a year was hit, the co-payments would be reduced.

To make sure the price signal is not diluted, private insurers would not be able to cover the co-payment, and medical practitioners would not have the power to waive it.

AMA president
Steve Hambleton
said such payments would be a powerful disincentive to stop people going to the GP when needed, describing the commission as “accountants trying to write a health system".

Payments for drugs subsidised by the government would be increased by $5, taking the cost for most patients from $36.90 to $41.90. Concession card holders would no longer receive drugs free once they hit a safety net, and be asked to pay $2.

The recommendations come with a wholesale restructuring of the private health insurance industry.

In a significant change to the current so-called “community rating" system, where risks are shared so that insurers cannot charge a sick person higher ­premiums than a healthy ­person, the Commission says insurers should be able to charge people with risky ­lifestyle choices (i.e. smokers) more.

Annual premium increases would no longer be subject to govern­ment ­approval, and a new industry-wide risk pool­ing scheme would be ­implemented to ­in­cen­tivise funds for having healthier members.

Private Healthcare Australia chief executive
Michael Armitage
said funds would welcome the opportunity to expand their role in Australian healthcare.

In an attempt to control the ­ballooning costs of subsidising ­medicines under the Pharmaceutical Benefits Scheme, the audit argues for capping its budget over a seven-year timescale.

Under this system, new drugs could not be added without old drugs having to be delisted to make room.

In recommendations that are likely to anger the powerful pharmacy lobby, the audit argues there are savings to be made by deregulating the pharmacy sector in order to encourage competition, including allowing pharmacies to open in supermarkets.